Inside The Cash Machine That Is Cannes Ad Festival

The Cannes Lions advertising festival is more than a competition for awards. For anyone who wants to matter in the world of advertising, the festival has become a costly battle to be seen.

Just attending the official part of the festival is pricey: tickets start at 2,130 euros ($2,890). And that’s only the initial cost. Many of the big ad agencies dedicate year-round teams to select and promote the best ad campaigns with the aim to win as many awards as possible in Cannes. That comes with a price.

Submitting a TV spot costs around 750 euros ($1,017), while an entry for what today is considered one of the hottest awards — the Titanium & Integrated Lions– is almost double the price.

For festival organizers, this translates into big bucks. Based on the number of entries —which this year again grew by another 2,000 to around 47,500 — the festival generated around EUR28 million from award entries alone. “It’s a big investment for people to come here,“ said Philip Thomas, CEO of the Lions Festivals, a unit of UK-based Top Right Group, which today counts six different advertising events around the globe. “We’re a business, not a charity.”

For ad agencies, the money is well spent, they say. “A gold winning piece at Cannes is damn good advertising,” said Jordan Henner, director of creative performance at WPP PLC-owned ad agency Ogilvy & Mather and in charge of coordinating award entries for the agency. “For clients, it’s a testament to the services they are getting.”

Signing checks to get a showing in the awards isn’t enough though. Companies compete to get one of the top slots on the festival’s center stage, where WPP’s Martin Sorrell on Friday will appear with Twitter’s Dick Costolo and where ad agency Grey on Wednesday features singer Courtney Love. Organizers got 400 requests for 55 available slots, according to Mr. Thomas.

For small UK-based ad agency Brave, this year is a big first. The 55-head agency hosted a seminar on the main stage with U.K. magician Dynamo, complete with a cocktail reception on a rooftop jointly organized by Google Inc. “It’s not easy for a small independent agency to be heard here,“ said Ash Bendelow, Brave’s managing director. “Not many small independent agencies manage to get their name on the big stage.”

The fight for a showing continues outside the festival palace and its famous red-carpeted stairs. Millions flow into lavish parties and numerous cocktail receptions in and around the city: on the beach, on rooftops or yachts. And thousands of PR firms are paid to promote events, parties and people.

Adding up entry fees for awards, delegate fees, flights and accommodation for attendees and social events, a Cannes bill can easily attain several hundreds of thousands of dollars. French ad group Havas SA alone has a budget of around 400,000 for its week in Cannes, said a person familiar with the matter.

Still, Cannes is the place to be this week for everyone in advertising, whether agencies, web giants and start ups. This week, around 12,000 people are attending, a number that can easily double when counting the numerous executives who travel in and out of the city during the week, without paying for the official part of the festival.

As the festival grows year by year into a denser jungle of events, business meetings and parties, organizers are extending the festival with break out events. This year, a separate two-day festival for the health communications industry took place for the first time, with another 1,500 award submissions. And next year, there may be a separate event on data and technology, said Mr. Thomas. “People sometimes criticize us for just wanting to make more money,“ he said. “But all we do is react to the changes in the industry.”

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